incentive stock options

Incentive stock options (ISOs) are a type of stock option that you can receive from your employer as part of your employee compensation. They work like this: your employer gives you the option to buy company stocks (usually at a discounted price) at some point in the future. When you decide to buy the stocks, you pay the discounted price, but if the stocks go up in value, you could make money when you sell them. It's a way for your employer to give you an incentive to stay with the company, because you have an opportunity to benefit from the company's success.